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Judgment in legal dispute over old Cuban debts in London

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Judgment in legal dispute over old Cuban debts in London

London/Havana. In the trial for part of Cuba’s old debts, a first verdict was handed down on Tuesday before the British Royal Court of Justice in London. Accordingly, the lawsuit brought against the Cuban state by the investment fund CRF I Ltd., which had been buying Cuban government bonds since 2009, was dismissed. The procedure is not off the table, however, since the Cuban central bank is now liable.

CRF, a Cayman Islands-based fund, is seeking around €72 million in government debt dating back to 1984 as part of the lawsuit. After an out-of-court settlement was not reached in 2018, the case ended up before the highest British court at the beginning of the year.

At the trial, Cuba stated that the fund was not a legitimate holder of the debt, as the central bank never approved the sale of debt to CRF. The debt came to the fund through “illegal means and serious irregularities committed by a central bank official in breach of the law,” the government said in a statement.

The court confirmed on Tuesday that the irregularities committed by Banco Nacional de Cuba (BNC) officials were a valid reason for the Cuban government to withhold its consent to the assignment of the debt in favor of CRF. These irregularities would first have to be investigated under criminal law and then punished in court. The process can only be continued against the Banco Central de Cuba (BCC), as Cuba’s central bank is now called. “CRF was successful against the BNC […] at the same time she lost to Cuba,” Judge Sara Cockerill summarized the verdict at the hearing.

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The verdict was hailed as a victory in the Cuban media. “The Republic of Cuba has dropped out of the process,” reported the state news portal Cubadebate.

“The BNC was and remains the central bank of Cuba for the management of this unpaid Cuban debt. […] We welcome Attorney General Silvera’s statement that Cuba will recognize our legitimate debts and legitimate creditors as CRF is both,” said CRF Chairman David Charters. Cuba has “won a technical point in the ruling,” in the context of the current economic crisis A “mutually beneficial solution” can now be found “that will have no impact on the Cuban budget for at least five years,” Charters said.

The outcome of the process will be closely monitored by Cuba’s western creditors after debt repayments have been temporarily suspended since the beginning of the economic crisis as a result of the corona pandemic and tightened US sanctions from 2020.

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